Break for Milk Buyers--Maybe

A state appeals court Monday struck down a law partly responsible for saddling Californians with the highest milk prices in the nation. Enacted in 1962, the law requires lowered-fat milk sold in the state to be enriched with protein- and calcium-bearing milk solids. It was enacted amid much hoopla about the need to boost Californians’ health, but as the court rightly observed, it had a less high-minded effect: barring out-of-state milk producers, which don’t add such solids, from competing with California dairies.

There’s no evidence of a greater incidence of calcium and protein deficiencies in the 49 states that don’t require added solids. The National Institute of Child Health and Human Development does say that 85% of teenage girls in the United States have unhealthfully low levels of calcium. But the underlying problem, health experts say, has more to do with their excessive intake of calcium-depleting sodium and caffeine than with their failure to drink fortified milk.

The appeals court ruling is unlikely to drive down shelf prices tomorrow. Before out-of-state dairies can enter the market, they will have to reach an agreement with the California Department of Food and Agriculture over how their milk should be labeled. The department’s challenge will be to ensure that the new labels clearly indicate calcium and protein levels and steer clear of vague terms like “fortified” and “unfortified.” Such labeling would be confusing because federal laws already require lowered-fat milk to be supplemented with vitamins A and D.

Even then, Californians will see lower shelf prices only if supermarkets decide to pass them on. Some consumer advocates say that’s unlikely any time soon because the “sales-below-cost rule,” a part of the state agriculture code, essentially allows supermarket chains to set artificially high milk prices by inflating their overhead costs. In February, Sen. Jackie Speier (D-Daly City) introduced a bill that would have repealed that monopolistic law. But after intense opposition from supermarket chains, the measure was gutted.

Until the Legislature repeals the sales-below-cost rule, milk prices in California won’t be subject to the full downward pressure of the free market. Nevertheless, the appeals court ruling is a significant step forward, removing a key barrier to competition that has kept milk prices too high for too long.